The city of Springvale imposes a net income tax on businesses operating within its jurisdiction. The tax equals 1% of income up to $100,000 and 1.5% of income in excess of $100,000. The Springvale Bar and Grill generated $782,000 net income this year. Compute its city income tax.

Question

Quizplus · Accepted Answer

The tax for the first $100,000 is 1%, which equals $1,000. For the remaining $682,000 (i.e., $782,000 - $100,000), the tax is 1.5%, which equals $10,230. Adding both amounts gives a total tax of $11,230.

The City of Springvale Imposes a Net Income Tax on Businesses